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White House could take bigger role in vetting costly regulations ahead of 2012

The involvement of President Obama’s chief of staff in last week’s decision to withdraw a smog rule might signal a more muscular White House role in vetting costly regulations ahead of the 2012 election.

Obama’s surprise move to block an ozone regulation from the Environmental Protection Agency (EPA) followed immense pressure from industry trade associations, which made numerous personal appeals to White House Chief of Staff Bill Daley.

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Daley met with the heads of several business groups more than two weeks before Obama withdrew the regulation — an unusual level of senior White House involvement in the regulatory process.

“We saw that as a positive — his level of interest, him sitting in on these meetings, him weighing in on this issue within the administration,” Johanna Schneider, executive director of external relations for the Business Roundtable, told The Hill. “I think it’s emblematic of his role in the administration as part of the outreach to the business community.”

The Business Roundtable wrote to Daley directly on July 15 and urged him to void the proposed ozone regulation. Schneider said Daley’s attention to the rule made it a top priority at the White House.

“It moved the issue up to the top of the agenda for the president. That is what happens when you have a White House chief of staff getting involved,” Schneider said. “You have one of the two or three people in government who can control the agenda.”

American Petroleum Institute President Jack Gerard said he’s hopeful the ozone decision foreshadows increased White House involvement in rulemakings.

“We are hopeful that all decisions will be scrutinized as closely as the ozone decision, because a lot of regulatory overreach is what creates the uncertainty that keeps the investment money on the sidelines,” Gerard said in an interview.

The White House did not respond to requests for comment Tuesday.

Gerard also said the decision to withdraw the ozone regulation is a “signal” that the White House is serious about the president’s government-wide regulatory review.

Gerard was in an Aug. 16 meeting with Daley to discuss the proposed ozone regulation alongside several leaders of major business groups — like Cal Dooley of the American Chemistry Council, Jay Timmons of the National Association of Manufacturers, John Engler of the Business Roundtable and Bruce Josten, the chief lobbyist for the U.S. Chamber of Commerce. The meeting was part of a formal rulemaking review process run by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA).

Daley participated in at least two of the seven meetings held by OIRA in July and August to review the rule. OIRA Administrator Cass Sunstein was in some of those meetings as well, including Daley’s other meeting that included groups that favored the proposed regulation, like the Sierra Club and Natural Resources Defense Council.

Rena Steinzor, president of the Center for Progressive Reform, a liberal-leaning regulatory think tank, said it was “astounding” and “really, really unusual” that Daley participated in the OIRA meetings.

“You hear rumors of him having meetings like this, but you never see him trundling down to their office in the Old Executive Office Building,” Steinzor said. “I think what this did is elevate this EPA rule to the highest levels of the White House. It shouldn’t go unremarked that the president’s top political guy was sitting in meetings with interest groups about what is essentially [EPA Administrator] Lisa Jackson’s responsibility.”

At their meeting last month, business groups highlighted data showing the increase in the number of counties that would be out of compliance with the tougher standards EPA was mulling. State efforts to come into compliance would saddle manufacturers and other industries with huge pollution control costs, they said, preventing economic growth in those regions.

Environmentalists accuse industry groups of peddling doom-and-gloom scenarios at odds with the success of other Clean Air Act rules in cutting pollution without hampering the economy.

Ex-OIRA heads told The Hill that they couldn’t recall a White House chief of staff stopping in on a formal rulemaking review meeting during their tenure.

Susan Dudley, a former OIRA administrator during the George W. Bush administration, said while it was not rare for people from the White House chief of staff’s office to participate in OIRA meetings on regulations under review, she couldn’t recall a meeting in which the actual chief of staff participated.

That said, Dudley thinks Daley’s participation shows how significant the ozone rule was, and is not a reflection of a broader change in White House policy.

“I think it illustrates how important the ozone regulatory decision was, but I’m not sure it indicates broader changes in the regulatory process going forward. I also think it’s commendably transparent that Bill Daley chose to participate in an OIRA meeting, which are disclosed to the public,” said Dudley, who is now at George Washington University.

“It is unusual, but I wouldn’t read a whole lot into it,” said Sally Katzen, who led OIRA under President Clinton. “During my tenure, I often had very, very senior people participate in the meetings. Bob Rubin [as director of the National Economic Council] was often at my side.”

Katzen, now a senior adviser at the Podesta Group, said she couldn’t remember a rulemaking review meeting where the White House chief of staff was present. Nevertheless, such meetings frequently include people from other policy offices in the White House.

“This was obviously of some importance to the White House, and the chief of staff chose to attend,” Katzen said.

The EPA was weighing a standard somewhere between 60 and 70 parts per billion (ppb), which is consistent with recommendations by EPA’s formal science advisers and tougher than the 75 ppb that the Bush EPA imposed in 2008.

EPA estimated that the toughest ozone standards under review would bring costs of up to $90 billion annually nationwide by 2020, a figure often touted by industry groups and Capitol Hill Republicans who called the proposed rule too aggressive.

The range of standards the agency was considering would bring costs between $19 billion and $90 billion annually in 2020, EPA estimated. But EPA also estimated that health benefits under the strictest standards would be $100 billion annually, with an overall range of $13 billion to $100 billion, depending on where the standard was set.

Public health advocates said tougher ozone standards are vital to reducing asthma, heart attacks, bronchitis and other woes.

Other agencies’ proposed regulations could end up on the chopping block due to White House involvement, according to Steinzor.

“I think it is very bad news for other regulations. I think it is bad news for OSHA, for FDA, for EPA, for anything industry starts to whine about too loudly. It suggests the Obama administration might not put up much resistance,” Steinzor said.

The White House, however, sought to reassure environmentalists last week that it plans to hold firm on other air pollution rules that Republicans hope to scuttle or delay, such as upcoming air toxics standards for power plants.

Frank Maisano of the law and lobby firm Bracewell & Giuliani — which represents power companies and refiners — said in an email to reporters Tuesday that he doesn’t expect the White House to block more EPA regulations on its own.

“It … seems less likely the president will alter any of the other rules. He has his pro-business talking point. This will seem to shift the onus on Congress to force any more changes,” wrote Maisano, a media specialist with the firm.